Banks have Rs 6,521 crore exposure to insolvent Go First airlines

MUMBAI :  With Go First Airlines filing for bankruptcy, the lenders are staring at a huge hit to their loans to the budget airline. Banks have exposure of around Rs 6,521 crore to the airline and its financial troubles will make it difficult for the lenders to recover their loans from the airline.

The lenders to Wadia-group owned Go First include Central Bank of India, Bank of Baroda, Axis Bank, IDBI Bank, and Deutsche Bank.  The banks will hold a meeting on Thursday to discuss about their future course of action regarding their exposure to the cash-strapped airline.“It is a consortium loan to the airline. We will meet tomorrow (Thursday) to discuss this issue,” a senior official of one of banks having exposure to the airline told this newspaper.

Go First had cancelled flights its flights after the company filed an application for voluntary insolvency on Tuesday. Public sector lender Central Bank of India has the highest exposure of nearly Rs2,000 crore to the airline. Bank of Baroda’s exposure is around Rs 1,430 crore, while Deutsche Bank’s exposure is about 
Rs 1,320 crore. 

The exposure of IDBI Bank is much less at Rs 50 crore. “Central Bank of India’s outstanding exposure to Go First Airlines as on March 31, 2023, is Rs 1,305 crore and additional amount of Rs 682 crore sanctioned under emergency line of credit guaranteed by Government of India.  Our exposure to the Company is only 0.91% of our total advances as of March 31, 2023, and interest charged upto April 30, 2023, is serviced by the company,” Central Bank of India said in a filing to the Bombay Stock Exchange.

The bank has made contingency provisions of more than Rs 1,500 crore in the books to strengthen the balance sheet. Axis Bank clarified on Wednesday that it has no outstanding exposure to the airline. “We would like to inform that as on date Axis Bank has Nil (fund based and non-fund based) outstanding from Go Airlines,” said Axis Bank in a filing to the BSE.

The impact of banks’ exposure to the airline was also visible in the stock market as shares of the banks plunged on Wednesday. Shares of Central Bank of India declined 5% to Rs 28.65 apiece, Bank of Baroda shares declined 2% to Rs 184 apiece while Axis Bank shares closed 1% to `860 apiece on the BSE. 

Banks are not much hopeful about the recovery of loans. Lenders believe that once a company files for bankruptcy the process of recovery becomes time consuming due to many claims and counter claims. Usually, the recovery from such cases is around 20-30% of total loans.

In total, the airline’s liabilities to all creditors stand at Rs 11,463 crore, including dues to banks, financial institutions, vendors and aircraft lessors. The Wadia group’s airline had blamed Pratt & Whitney for its decision to file a voluntary bankruptcy petition with the National Company Law Tribunal (NCLT).

Go First’s troubles hit banks

Rs 6,521 crore: Total exposure of banks to Go First

Rs 2,000 crore: Exposure of Central Bank of India to Go First

Lenders will hold meeting today (Thursday) to discuss loan recovery

Rs 1,430 cr Exposure of Bank of Baroda to Go First

MUMBAI :  With Go First Airlines filing for bankruptcy, the lenders are staring at a huge hit to their loans to the budget airline. Banks have exposure of around Rs 6,521 crore to the airline and its financial troubles will make it difficult for the lenders to recover their loans from the airline. The lenders to Wadia-group owned Go First include Central Bank of India, Bank of Baroda, Axis Bank, IDBI Bank, and Deutsche Bank.  The banks will hold a meeting on Thursday to discuss about their future course of action regarding their exposure to the cash-strapped airline.“It is a consortium loan to the airline. We will meet tomorrow (Thursday) to discuss this issue,” a senior official of one of banks having exposure to the airline told this newspaper. Go First had cancelled flights its flights after the company filed an application for voluntary insolvency on Tuesday. Public sector lender Central Bank of India has the highest exposure of nearly Rs2,000 crore to the airline. Bank of Baroda’s exposure is around Rs 1,430 crore, while Deutsche Bank’s exposure is about  Rs 1,320 crore. googletag.cmd.push(function() {googletag.display('div-gpt-ad-8052921-2'); }); The exposure of IDBI Bank is much less at Rs 50 crore. “Central Bank of India’s outstanding exposure to Go First Airlines as on March 31, 2023, is Rs 1,305 crore and additional amount of Rs 682 crore sanctioned under emergency line of credit guaranteed by Government of India.  Our exposure to the Company is only 0.91% of our total advances as of March 31, 2023, and interest charged upto April 30, 2023, is serviced by the company,” Central Bank of India said in a filing to the Bombay Stock Exchange. The bank has made contingency provisions of more than Rs 1,500 crore in the books to strengthen the balance sheet. Axis Bank clarified on Wednesday that it has no outstanding exposure to the airline. “We would like to inform that as on date Axis Bank has Nil (fund based and non-fund based) outstanding from Go Airlines,” said Axis Bank in a filing to the BSE. The impact of banks’ exposure to the airline was also visible in the stock market as shares of the banks plunged on Wednesday. Shares of Central Bank of India declined 5% to Rs 28.65 apiece, Bank of Baroda shares declined 2% to Rs 184 apiece while Axis Bank shares closed 1% to `860 apiece on the BSE.  Banks are not much hopeful about the recovery of loans. Lenders believe that once a company files for bankruptcy the process of recovery becomes time consuming due to many claims and counter claims. Usually, the recovery from such cases is around 20-30% of total loans. In total, the airline’s liabilities to all creditors stand at Rs 11,463 crore, including dues to banks, financial institutions, vendors and aircraft lessors. The Wadia group’s airline had blamed Pratt & Whitney for its decision to file a voluntary bankruptcy petition with the National Company Law Tribunal (NCLT). Go First’s troubles hit banks Rs 6,521 crore: Total exposure of banks to Go First Rs 2,000 crore: Exposure of Central Bank of India to Go First Lenders will hold meeting today (Thursday) to discuss loan recovery Rs 1,430 cr Exposure of Bank of Baroda to Go First